DTN Midday Livestock Comments

Strong Late-Week Buying Develops in Livestock Futures

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Russ Quinn)
GENERAL COMMENTS:

Strong gains have developed in nearby contracts in all livestock futures. Gains above $1 per cwt is helping to bring some additional underlying support back into the market despite the limited trade activity seen Friday morning. Corn prices are higher in light trade. July corn futures are 1 cent higher. Stock markets are higher in light trade. The Dow Jones is 63 points higher while Nasdaq is up 2 points.

LIVE CATTLE:

Firm to strong buyer support has redeveloped in live cattle trade late Friday morning. This is helping to bring even more activity back into the complex. June futures are trading above $109 per cwt with $1.10 per cwt gains, while August futures are $1.50 per cwt higher. The focus on potential support in cash markets is helping to bring some light underlying support to the complex, although there is concern that traders may take a more casual approach early next week. This may cause some additional market volatility due to very light activity. Cash cattle bids have started to increase through the morning, although offers are not significantly changed from earlier in the week. Bids are seen at $110 live basis and $180 to $181 dressed. Asking prices have remained firm at $115 and higher live and $185 dressed. Trade should develop through the early to mid-afternoon. Boxed Beef cut-outs at midday are higher, $1.20 higher (select) and up $0.18 per cwt (choice) with light movement of 68 total loads reported (33 loads of choice cuts, 17 loads of select cuts, 8 loads of trimmings, 9 loads of ground beef).

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FEEDER CATTLE:

Strong feeder cattle futures are seen late Friday following sluggish mixed trade earlier in the session. August and September contracts are holding gains of $1 to $1.40 per cwt. The buyer interest is being driven by the support in live cattle trade. This may add increased overall support to the complex. Narrow gains are seen in deferred contracts as this buying is focused on spill-over interest from nearby contracts as most traders seem comfortable with the current market direction.

LEAN HOGS:

Strong late-week gains have quickly developed across the complex with futures holding $1.40 to $1.65 per cwt gains through midday. Although limited trade activity is seen through all other contracts in deferred months posted narrowly mixed trade with prices from 15 cents lower to 15 cents higher. The light activity seen across the complex should continue to support nearby buying activity through the end of the session. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.93 at $76.34 per cwt with the range from $70.00 to $79.00 on 5,170 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $0.69 at $77.34 per cwt with the range from $70.00 to $79.00 on 3,682 head reported sold. The National Pork Plant Report posted 147 loads selling with carcass values gaining $0.94 per cwt. Lean hog index for 6/06 is at $73.50 up 1.00 with a projected two-day index of $74.57, up 1.07.

Rick Kment can be reached at rick.kment@dtn.com

(SK)

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Rick Kment